NightHawk Radiology Holdings, Inc. (NHWK)
Q2 2010 Earnings Call
August 05, 2010 04:30 pm ET
Andrea Clegg - VP, Finance
Dave Engert - President and CEO
Dave Sankaran - CFO
Brooks O'Neil - Dougherty & Company
Sean Wieland - Piper Jaffray
Previous Statements by NHWK
» NightHawk Radiology Holdings, Inc. Q1 2010 Earnings Call Transcript
» NightHawk Radiology Holdings, Inc. Q4 2008 Earnings Call Transcript
» NightHawk Radiology Holdings, Inc. Q3 2008 Earnings Call Transcript
Welcome to the NightHawk Radiology Holdings Second Quarter 2010 Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) This conference is being recorded today, Thursday, August 5, 2010.
At this time, I would like to turn the conference over to Ms. Andrea Clegg, Vice President of Finance. Please go ahead, ma'am.
Good afternoon, everyone, and thank you for joining us. I would like to welcome you to the NightHawk Radiology conference call to discuss the company's results for the second quarter of 2010. By now, you should have received a copy of the press release, which was sent out a short while ago. If anyone still needs a copy, you can access it on the Investor Relations section of our website at www.nighthawkrad.net.
On the call this afternoon, we have Dave Engert, our President and Chief Executive Officer and Dave Sankaran, our Chief Financial Officer. After management completes their prepared remarks, we will open the lines for your questions.
Please note this afternoon's conference call is being recorded and will be available for three weeks on our website. I want to remind you that management will be making certain forward-looking statements in their remarks. All statements other than statements of historical fact that address activities, events or developments that the company believes, anticipates, intends, expects, estimates or projects and similar expressions are forward-looking statements. These forward-looking statements are based on assumptions and assessments made by the company's management based on factors they believe to be appropriate in light of their experience.
However, these forward-looking statements are subject to risks and uncertainties that could cause actual results and business decisions to differ materially from those contemplated by these statements. We describe these uncertainties and risks in the Risk Factors section of our periodic reports filed with the US Securities and Exchange Commission. The company undertakes no duty to update or revise any forward-looking statements made during this call, whether as a result of new information, future events or otherwise.
Finally, we will be presenting certain financial measures on this call that will be considered non-GAAP under SEC Regulation G. For reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, please refer to the information included in our press release and in our SEC filings.
At this point, I will turn the call over to Dave Engert, NightHawk's Chief Executive Officer.
I am particularly encouraged by several recent events that I would like to share with you. First, we are pleased with our overall results for the quarter, as they were better than anticipated.
We exceeded expectations on our guidance with $38.8 million in revenue and $0.10 adjusted earnings per share of which $0.07 are from our continuing core business and $0.03 from our St. Paul Radiology relationship.
Second, as I have been mentioning since Q1, we have continued to take the appropriate steps to protect the quality of our earnings by cutting more than $4 million in annualized overhead cost during the quarter. This brings our year-to-date annualized overhead cost reductions to more than $6 million per year, and another $2 million in planned expenses we have chosen not to incur.
Finally, we reached settlement with St. Paul Radiology on June 30th on the terms we expected and as previously shared with you. Results from St. Paul will obviously no longer be included in our go forward results and Dave Sankaran will discuss more specifics about this deal in his update.
I will, however, say that the $26 million settlement resulted in what we believe to be the most favorable outcome available for the company, and for our shareholders. Commensurate with the settlement we also lowered our outstanding debt by the full $26 million down to $51.8 million at quarter end and made a commitment to pay another $10 million in the near term.
Looking at our ongoing business, our volume year-over-year was essentially flat at about 1% growth, but the continued effect of price declines resulted in our quarterly revenues declining 9% from last year.
An encouraging sign, however, was that our final's volume continue to grow 37% year-over-year, which represents our most significant growth opportunity. We clearly still have some challenges to address in our core business and our priorities continue to be focused on high quality service level for our customers combined with achieving more cost effective operations.
Our earnings from continued operations and related expenses are not yet, where we want them to be. At this point, we have taken step this year to cut a significant amount of operating cost out of the business and starting in the first quarter, we begin to right size the company and flatten management by eliminating several senior level positions.
We continued in second quarter with additional reductions of 35 employees and closed several offices. We ended the second quarter with approximately 330 employees down from over 500 that we ended 2009 with. This reduction totals 55 employees in our NightHawk operations and 125 associated with St. Paul settlement.
We continue to evaluate other operational efficiencies and we are working to further optimize our workflow solution. We are lowering our professional services expense by contracting with additional positions and more competitive market rates in order to support our growing finals business.